Category Archives: Financial Freedom

How to Invest for Beginners: Peter Lynch

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Investing can be for anybody, but is certainly not for everybody.

Only a handful of professional investors can compare to the legendary Peter Lynch. He rose to investing stardom in 1977 when he was appointed the fund manager of Fidelity’s Magellan Fund.

When Lynch took over, the fund had around $18 million in assets under management. After 13 years at the helm, Lynch increased the fund’s size by almost a thousand-fold.

In 1990, the Magellan Fund, and its over $14 billion in assets under management, became the biggest mutual fund in the world. At times, the fund held over 1,000 different stocks in its portfolio. Also, there was a period when it had an average annual return of 29.9%.

It doesn’t matter if you don’t know anything about investing, since there are actions a beginning investor can take to learn how to invest and how to manage their money and finances. One of the most important actions for new investors is to get started early.

Investing doesn’t have to be hard. Yet, it’s important to learn the basics of investing and what type of investments are the best depending on your financial situation and the amount of money you want to make. 

When you make it a point to save money, you are protecting yourself against life’s unforeseen difficulties. And when you invest, if you choose to do so, you will have a chance to earn much more than you would have expected to, growing your money exponentially.

Time Period

Long-term investing is one of the key concepts in Lynch’s and many of the most successful investor’s investment philosophy. Lynch argued that the value of stocks was rather easy to predict over a 10 to 20-year period, while short term predictions were pretty much useless and effectively impossible to make accurately due to market volatility.

Source: Brian Feroldi

Therefore, he strongly urged investors to always select stocks of companies that they understand, believe in and be patient to wait for them to go up over a long period of time rather than selling for profits.

According to research, if you invest a $1,000 every year on the highest day for a period of 30 years, you can expect a 10.6% annualized return. On the other hand, if you invest the same sum on the lowest day of the year, you can expect an 11.7% compounded return over the same period.

Peter Lynch also encouraged the reader to look for the tenbagger stocks.

A tenbagger is a stock that rises in value 10-fold or 1,000%. He advises against selling when the stock goes up 40% or even 100%. Instead, he urges investors to hold onto them for the long-term, despite the common trend of many investors to take profits by selling appreciated stocks.

References:

  1. https://finmasters.com/one-up-on-wall-street-review/
  2. https://www.benzinga.com/money/peter-lynch-books

Grant Sabatier: The 7 Levels of Financial Freedom

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“It’s important to view money not as something that allows you to buy things, but view it as a means of giving you more choices in how you want to live.”

Grant Sabatier, the author of “Financial Freedom”, views money not as something that allows you to buy things, but as a means of giving you more choices in how you want to live. “With every dollar you save, you give yourself more freedom and options in life,” he said. “Based on how much you have saved and invested, ask yourself, ‘How many months of freedom have you acquired?’”

Sabatier’s 7 levels of financial freedom

Level 1: Clarity

The first step is taking stock of your financial situation — how much money you have, how much you owe, and what your goals are. “You can’t get to where you want to go without knowing where you’re starting from,” Sabatier says.

Level 2: Self-Sufficiency

Next, you’ll want to be standing on your own two feet, financially speaking. This means earning enough to cover your expenses without any outside help, such as contributions from Mom and Dad.

At this level, Sabatier notes, you may be living paycheck-to-paycheck or taking on loans to make ends meet.

Level 3: Breathing room

People at Level 3 have money left over after living expenses that they can put toward goals such as building an emergency fund and investing for retirement.

Escaping Level 2 means giving yourself some financial leeway, which Sabatier notes doesn’t necessarily mean making a much bigger salary. Indeed, 31% of working Americans making over $100,000 live paycheck-to-paycheck, according to MagnifyMoney.

“Just because you make a lot of money doesn’t mean you’re actually saving that money,” Sabatier says. “Most people in this country live through debt.”

Level 4: Stability

Those who reach Level 4 have paid down high interest rate debt, such as credit card debt, and have stashed away six months’ worth of living expenses in an emergency fund. Building up emergency savings helps ensure that your finances won’t be thrown off track by unexpected circumstances.

“At this level, you’re not worried if you lose your job or if you have to move to a different city,” Sabatier says.

When calculating how much you’d need to have saved, thinking about what your financial picture might look like understand exigent circumstances, rather then your regular, everyday expenses, financial experts say.

“If you have a job loss, you’d make some changes. You’d probably cut your gym membership and get rid of your subscriptions, for instance,” Christine Benz, director of personal finance and retirement planning at Morningstar, told Grow. “Think about the bare minimum you’d need to get by.”

Level 5: Flexibility

People at Level 5 have at least two years’ worth of living expenses saved. With those kinds of savings, Sabatier suggests, you have the ability to think about your money terms of the time it can buy you: “You could take a year off from your job if you wanted to.”

You needn’t carry all of this money in cash, Sabatier notes: It could be a sum total from your savings and investment accounts. As long as you’re able to access that money somehow, if you need it, you have the flexibility to untether yourself, at least temporarily, from the workforce.

Level 6: Financial Independence

People who have achieved financial independence can live solely off the income generated from their investments, according to Sabatier’s framework.

“You generally have one of two things,” says Sabatier. “You either have a large pile of money in an investment portfolio that’s generating interest, or you have rental properties, and cashflow from the rent covers your living expenses, or a hybrid of the two.”

To get here, you’ll have to invest a high percentage of your income, which could require you to shift to a more modest lifestyle to drastically lower your cost of living. Pursuing this lifestyle requires a change in thinking away from the traditional paradigms of personal finance, Sabatier says.

“People are being taught to save 5%, 10%, 15% of their income, and maybe you’ll be able to retire when you’re 65,” he says. “Thankfully, more young people are starting to understand that if I aggressively save and invest, I can work less and have more control over my future and my destiny.”

Level 7: Abundant Wealth

Financially independent folks who live off their portfolio income rely on the “4% rule” — a retirement rule of thumb that posits that an investor can safely withdraw 4%, adjusted for inflation, from a balanced portfolio of stocks and bonds each year, and be relatively certain that the money will continue to grow and won’t run out.

Although economists debate whether 4% is the optimal number (some more conservative observers think the right figure might be closer to 3.3%), the calculation behind it serves as the basis for establishing a FIRE number — the amount of money you’d need to retire and earn an annual income you could comfortably live on.

While those in Level 6 need to monitor swings in their portfolio to make sure their retirement is still going according to plan, those in Level 7 have no such worries. “Level 7 is abundant wealth — having more money than you’ll ever need,” Sabatier says. “You don’t have to worry about money, and it’s not essential to your day-to-day existence.”

References:

  1. https://grow.acorns.com/self-made-millionaire-grant-sabatier-levels-of-financial-freedom/
  2. https://www.cnbc.com/2022/05/10/the-7-levels-of-financial-freedom-according-to-a-millionaire-50percent-of-us-workers-are-at-level-2.html

10 Powerful Quotes ~ “The Psychology of Money”

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“Rich is the current income. Wealth is income not spent. Wealth is hard because it requires self-control.” Morgan Housel

10 Powerful Quotes from “The Psychology of Money” by “Morgan Housel”

  1. “Spending money to show people how much money you have is the fastest way to have less money.”
  2. “Getting money is one thing. Keeping it is another.”
  3. “Be nicer and less flashy. No one is impressed with your possessions as much as you are.”
  4. “You might think you want a fancy car or a nice watch. But what you probably want is respect and admiration.”
  5. “Use money to gain control over your time.”
  6. “Saving is the gap between your ego and your income.”
  7. “Savings can be created by spending less. You can spend less if you desire less. And you will desire less if you care less about what others think of you. Money relies more on psychology than finance.”
  8. “Rich is the current income. Wealth is income not spent. Wealth is hard because it requires self-control.”
  9. “Happiness is just results minus expectations.”
  10. “In fact, the most important part of every plan is planning on your plan not going according to plan.”

https://twitter.com/books_dq/status/1517815934056075264

A few bonus quotes:

“”Be more patient” in investing is the “sleep 8 hours” of health. It sounds too simple to take seriously but will probably make a bigger difference than anything else you do.”

“The formula for how to do well with money is simple. The behaviors you battle while implementing that formula are hard.”

“”Save more money and be more patient” is too simple for most people to take seriously, but it’s the best solution to most financial problems.”

References:

  1. https://www.collaborativefund.com/blog/rules-truths-beliefs/
  2. https://www.collaborativefund.com/blog/$/

12 Timeless Rules of Investing

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Guidelines Every Investor Should Embrace, But Few Actually Do

An Investment U White Paper Report written by Dr. Steve Sjuggerud, Advisory Panelist, Investment U

In the the white paper report, Dr. Sjuggerud identified 12 classic investing rules that every investor can use throughout their lifetimes.

These guidelines are provided to help investors achieve their goals, sometimes in capitalizing on gains and sometimes in mitigating losses.

1. An attempt at making a quick buck often leads to losing much of that buck.

  • The people who suffer the worst losses are those who overreach.
  • If the investment sounds too good to be true, it is.
  • The best hot tip is “there is no such thing as a hot tip.”

2. Don’t let a small loss become large.

  • Don’t keep losing money just to “prove you are right.”
  • Never throw good money after bad (don’t buy more of a loser).
  • When all you’re left with is hope, get out.

3. Cut your losers; let your winners ride.

  • Avoid limited-upside, unlimited-downside investments.
  • Don’t fall in love with your investment; it won’t fall in love with you.

4. A rising tide raises all ships, and vice versa. So assess the tide, not the ships.

  • Fighting the prevailing “trend” is generally a recipe for disaster.
  • Stocks will fall more than you think and rise higher than you can imagine.
  • In the short run, values don’t matter. In the long run, valuations do matter.

5. When a stock hits a new high, it’s not time to sell something that is going right.

  • When a stock hits a new low, it’s not time to buy something that is going wrong.

6. Buy and hold doesn’t ALWAYS work.

  • If stocks don’t seem cheap, stand aside.

7. Bear markets begin in good times. Bull markets begin in bad times.

8. If you don’t understand the investment, don’t buy it.

  • Don’t be wooed. Either make an effort to understand it or say “no thanks.”
  • You can’t know everything, so don’t stray far from what you know.

9. Buy value, and sell hysteria.

  • Paying less than the underlying asset’s value is a proven successful investing strategy.
  • Buying overvalued stocks has proven to under perform the market.
  • Neglected sectors often offer good values.
  • The “popular” sectors are often overvalued.

10. Investing in what’s popular never ends up making you any money.

  • Avoid popular stocks, fad industries and new ventures.
  • Buy an investment when it has few friends.

11. When it’s time to act, don’t hesitate.

  • Once you’re in, be patient and don’t be rattled by fluctuations.
  • Stick with your plan… but when you make a mistake, don’t hesitate.
  • Learn more from your bad moves than your good ones.

12. Expert investors care about risk; novice investors shop for returns.

  • If you focus on the risks, the returns will eventually come for you.
  • If you focus on the returns, the risks will eventually come for you.

Good investing.

References:

  1. https://investmentu.com/timelessrules/

Food, Sleep, and Exercise Impacts Your Success

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The secret to becoming successful in life and business starts with how healthy you are. And that means that you’re eating healthy, getting enough sleep, and exercising daily.

Health is wealth. Why food, sleep, and exercise can impact your success?

You Are What You Eat

When it comes to your productivity, you are what you eat!

Writing in the Harvard Business Review, Ron Friedman states, “Food has a direct impact on our cognitive performance, which is why a poor decision at lunch can derail an entire afternoon.”

“Just about everything we eat is converted by our body into glucose, which provides the energy our brains need to stay alert,” Fredman continues. “When we’re running low on glucose, we have a tough time staying focused and our attention drifts. This explains why it’s hard to concentrate on an empty stomach.”

Certain foods like pasta, bread, cereal and soda, “release their glucose quickly, leading to a burst of energy followed by a slump.” High fat meals, however, “(think cheeseburgers and BLTs) provide more sustained energy, but require our digestive system to work harder, reducing oxygen levels in the brain and making us groggy.”

Replace that junk food with options like kale, blueberries, fish, walnuts, and green tea if you want to give your cognitive functions a boost.

Get a Good Night’s Sleep

Adequate, quality rest each night is essential for good health. Sleep provides the foundation for all our daily habits and decisions. A lack of quality sleep can negatively impact our mood as well as our ability to focus on daily tasks and activities.

The Division of Sleep Medicine at Harvard Medical School reiterates how essential a good night’s sleep is. “Lack of sleep exacts a toll on perception and judgment. In the workplace, its effects can be seen in reduced efficiency and productivity, errors, and accidents. Sometimes the effects can even be deadly, as in the case of drowsy driving fatalities.”

While sleep is important, it doesn’t have to be eight hours. In fact, only 27% of highly successful people sleep between 7-8 hours. Another 27% get 6-7 hours, while 32% only sleep for 5-6 hours. Most of these individuals sleep from the hours of 11pm to 5am as well.

To get a good night’s sleep, create a schedule and stick to it. You should also avoid drinking alcohol and regular coffee, keep you room dark and cool (between 60 and 67 degrees is ideal), have a comfortable mattress, and have a relaxing ritual before you go to bed, such as reading or meditating.

Exercise – Get Your Sweat On

One highly effective habit of successful individuals is daily exercise. Besides keeping off unwanted pounds, exercising daily can help with;

  • Decreasing stress,
  • Boosting your immune system,
  • Keeping you productive, and
  • Helping you sleep better at night.

Even if you can’t go to the gym for an hour everyday, you can always start taking baby steps. For example, you could start using a standing desk, taking the stairs instead of the escalator or elevator.

These small actions add-up and ensure that you stay at your best physically, mentally, and emotionally.

Food, sleep, and exercise can impact your success. Thus, it’s important that you make your health a priority.

References:

  1. https://www.inc.com/john-rampton/the-importance-of-food-sleep-and-exercise-and-how-it-impacts-your-success.html
  2. https://www.mayoclinichealthsystem.org/hometown-health/speaking-of-health/sleep-is-the-foundation-for-healthy-habits

Building Wealth

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Jack Ma the richest man in China said, “If you put the Banana and Money infront of a monkey. The monkey will choose Banana because the monkey don’t know that money can buy alot of Bananas.

In fact, if you offer Work and Business to most people, they will choose to Work because most people don’t know that a Business can make more money than salary.

One of the reason most people fail to build wealth is because they have not been educated or trained to recognise the entrepreneurial opportunity.

They spend alot of time in school and what they learn in school is work for a salary instead of working for themselves.

Profit is better than wages because wages can support you, but profits and owning assets can make you wealthy.

Source: https://www.facebook.com/109901988144184/posts/165519812582401/

Investing Involves Decision Making

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Investing involves decision-making. But not making those investing decisions can be a more costly move in itself.

Choosing to invest your money in the stock market is like picking your first tattoo. The stakes are high and all the available options can seem overwhelming to your senses. Thankfully, there is an an abundant amount of good financial services, resources and advice available to help you avoid making a mistake mistake and to get you started.

There is truly no time like the present to start investing. Because the sooner you start, the more time your money has to grow and the more potential you have to earn, because of the power of compound interest. This is when your money earns money on itself and grows exponentially.

But, growth isn’t always guaranteed. Investing means taking in a certain amount of risk since the market moves in cycles. Although investing comes with some risk, it doesn’t have to feel like a high-stakes gamble.

Rest assured, historically, stocks have bounced back from every downturn in history. And, then continued to climb. Investing consistently overtime can make it easier to ride out the market volatility, the ups and downs.

The first step is determining what you want your future to look like financially in retirement. Retirement is probably your most important and expensive goal, and a good place to start.

It’s important to build a portfolio based on your time horizon, how you want to invest, how comfortable you’re with risk and what you plan to use your investment earnings are for. But, you must get started.

Ready, set, go(als).

Investing could help you owe the IRS less during tax time. For example, you have until the tax filing deadline each year to open and fund an IRA, which could help you claim an extra deduction.

Harvesting losses in your brokerage account could help you reduce your capital gains taxes for the year.

If you want more control over your investment portfolio, self-directed investing is the way to go. Self-directed investing is for people at all experience levels.

However, if you prefer a hands-off approach, financial advisors or automated robo-advisors can help you capture your financial goals and tailor an investment portfolio to achieve your financial goals, complete with regular rebalancing.

But, before you jump headfirst into investing your money, it’s wise to assess your present financial status first (your cash flow and net worth) and make sure you’ve got a solid savings foundation to build on.

Finding a balance between saving your money and building wealth through investing for your future is not rocket science. It is simple to build savings and help take the fear and uncertainty out of investing.

References:

  1. https://taskandpurpose.com/from-our-partners/set-your-future-up-for-success-save-and-invest/
  2. https://www.brighthousefinancial.com/education/retirement-planning/covering-everyday-expenses-in-retirement/

Budgeting 50-30-20 Strategy and Cash Flow

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Managing your money and tracking your finances is essential in building wealth, but it doesn’t have to be complicated or painful process. It can be as simple as creating a budget. And, a budget starts with listing of your income and your expenses.

One simple strategy for tracking your personal cash flow (income and expenses) is the 50-30-20 budgeting strategy. With this budgeting strategy, you divide your income into three broad categories: necessities, wants, and savings and investments, according to those ratios.

—- 50% of your income should go toward things you need

This category includes all of your essential costs, such as rent, mortgage payments, food, utilities, health insurance, debt payments and car payments.

If your necessary expenses take up more than half of your income, you may need to cut costs or dip into your wants fund.

—- 20% of your income should go toward savings and investments

This category includes liquid savings, like an emergency fund; retirement savings, such as a 401(k) or Roth IRA; and any other investments, such as a brokerage account.

Experts typically recommend aiming to have enough cash in your emergency fund to cover between three and six months worth of living expenses. Some also suggest building up your emergency savings first, but, you don’t just want to save this money.

You want to invest it and make it work for you. That means contributing to your employer’s 401(k) plan if they offer one or saving in other retirement accounts, such as a Roth IRA or traditional IRA.

—- 30% of your income should go toward things you want

This final category includes anything that isn’t considered an essential cost, such as travel, subscriptions, dining out, shopping and fun.

This category can also include luxury upgrades: If you purchase a nicer car instead of a less expensive one, for example, that dips into your wants category.

But think about what matters to you before spending this money. As research shows, how you spend is oftentimes more important than your overall income or the amount you spend in total.

Money experts suggest you spend on experiences, such as trips or classes, rather than things. “All of the best psychological research on money and happiness tell us that spending money on experiences brings more (and more lasting) happiness than spending money on material objects,” says Ron Lieber, New York Times columnist and author.

There isn’t a one-size-fits-all approach to money management, but the 50-30-20 plan can be a good place to start if you’re new to budgeting and are wondering how to divide up your income.

References:

  1. https://www.cnbc.com/2021/06/25/best-free-budgeting-tools-2021-how-to-make-your-own-spreadsheet.html
  2. https://www.cnbc.com/2021/05/11/how-to-follow-the-50-30-20-budgeting-strategy.html
  3. https://www.cnbc.com/2019/07/22/use-the-50-30-20-formula-to-figure-out-how-much-you-should-save.html

Financial Freedom

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“It’s the ability to live and maintain the lifestyle which you desire without having to work or rely on anyone for money.” T Harv Eker

Financial Peace guru Dave Ramsey proclaims that “Financial freedom means that you get to make life decisions without being overly stressed about the financial impact because you are prepared. You control your finances instead of being controlled by them.”

It’s about having complete control over your finances which is the fruit of hard work, sacrifice and time. And, as a result, all of that effort and planning was well worth it!

Nevertheless, reaching financial freedom may be challenging but not impossible. It also may seem complicated, but in just a straightforward calculation, you can easily estimate of how much money you’ll need to be financially free.

What is financial freedom? Financial freedom is the ability to live the remainder of your life without outside help, working if you choose, but doing so only if you desire. It’s the ability to have the things you want and need, despite any occurrence other than the most catastrophic of outside circumstance.

To calculate your Financial Freedom Number, the total amount of money required to give you a sufficient income to cover your living expenses for the rest of your life

Step 1: Calculate Your Spending

Know how much you are spending each year. If you’ve done a financial analysis (net worth and cash flow), created a budget, and monitored your cash flow, then you’re ahead.

Take your monthly budget and multiply that amount by 12. Make sure you include periodic expenses such as annual premiums and dues or quarterly bills. Also include continued monthly contributions into accounts like your emergency fund, vacation clubs, car maintenance, etc.

Add all these together to get your Yearly Spending Total.

Keep in mind the lower the spending total, the lower the amount of money you’ll need to become financially independent. Learn how to lower your monthly household expenses and determine the difference between needs and wants.

Step 2: Choose Your Safe Withdrawal Rate

The safe withdrawal rate (also referred to as SWR) is a conservative method that retirees use to determine how much money can be withdrawn from accounts each year without running out of money for the rest of their lives.

The safe withdrawal rate method instructs financially independent people to take out a small percentage between 3-4% of their investment portfolios to mitigate worst-case scenarios. This withdrawal percentage is from the Trinity Study.

The Trinity Study found the 4% rule applies through all market ups and downs. By making sure you do not withdraw more than 4% of your initial investments each year, your assets should last for the rest of your life.

Step 3: Calculate Your Financial Independence (FI) Number

Your FI number is your Yearly Spending Total divided by your Safe Withdrawal Rate.

To find the amount of money you’ll need to be financially independent, take your Yearly Spending Total and divide it by your SWR.

For example:

  • Yearly Spending: $40,000
  • Safe Withdrawal Rate: 4%

Financial Independence Number = Yearly Spending / SWR

  • $40,000 / 0.04 = $1,000,000

Who becomes financially free? According to most financial advisors, compulsive savers and discipline investors tend to become financially free since:

  • They live on and spend less they earn.
  • They organize their time, energy and money efficiently in ways conducive to building wealth.
  • They have a strong belief that gaining financial freedom and independence is far more important than displaying high social status and financial symbols.
  • Their parents did not keep on helping them financially.
  • They have a keen insight to recognize financial and wealth building opportunities.

Net worth is the most important number in personal finance and represents your financial scorecard. Your net worth includes your investments, but it also includes other assets that might not generate income for you. Net Worth can be defined to mean:

  • Income (earned or passive)
  • Savings
  • Investing to grow and to put your money to work for you)
  • Simple and more frugal lifestyle

Financial freedom means different things to different people, and different people need vastly different amounts of wealth to feel financially free.

Maybe financial freedom means being debt-free, or having more time to spend with your family, or being able to quit corporate America, or having $5,000 a month in passive income, or making enough money to work from your laptop anywhere in the world, or having enough money so you never have to work another day in your life.

Ultimately, the amount you need comes down to the life you want to live, where you want to live it, what you value, and what brings you joy. Joy is defined as a feeling of great pleasure and happiness caused by something exceptionally good, satisfying, or delightful—aka “The Good Life.”

It is worth clearly articulating what the different levels of financial freedom mean. Grant Sabatier’s book, Financial Freedom: A Proven Path to All the Money You’ll Ever Need, the levels of financial freedom are:

Seven Levels of Financial Freedom

  1. Clarity, when you figure out where you are financially (net worth and cash flow) and where you want to go
  2. Self-sufficiency, when you earn enough money to cover your expenses
  3. Breathing room, when you escape living paycheck to paycheck
  4. Stability, when you have six months of living expenses saved and bad debt, like credit card debt, repaid
  5. Flexibility, when you have at least two years of living expenses invested
  6. Financial independence, when you can live off the income generated by your investments and work becomes optional
  7. Abundant wealth, when you have more money than you’ll ever need

The difference between income and wealth: Wealth is accumulated assets, cash, stocks, bonds, real estate investments, and they have passive income. Simply, they don’t have to work if they don’t want to.

Accumulating wealth and becoming wealthy requires knowing what you want, discipline, taking responsibility and have a plan.

Hundreds of thousands of Americans have great incomes, but you wouldn’t call them wealthy because of debt and lack of accumulated assets, instead:

  • They owe for their homes
  • They owe for their cars and boats.
  • They have little savings and investments
  • They have few “paid for” assets
  • They have negative net worth

Essentially, if you make a great income and spend it all, you will not become wealthy. Often, high income earners’ true net worth is far less than they think it is.

Here are several factors and steps to improve your financial life:

  • Establishing financial goals
  • Paying yourself first and automate the process
  • Creating and sticking to a budget. Know where you money goes.
  • Paying down and/or eliminating credit card and other bad debt. Debt which is taking from your future to pay for your past.
  • Saving for the future and investing for the long term consistently
  • Investing the maximum in your employer’s 401(k)
  • Living on and spending less than you earn
  • Simplify – separating your needs from your wants. You don’t need to keep buying stuff.

Financial freedom can look something like this:

  • Freedom to choose a career you love without worrying about money
  • Freedom to take a luxury vacation every year without it straining your budget
  • Freedom to pay cash for a new boat
  • Freedom to respond to the needs of others with outrageous generosity
  • Freedom to retire a whole decade early

When you have financial freedom, you have options.

“Your worth consists in what you are and not in what you have. What you are will show in what you do.” Thomas Edison

References:

  1. https://www.phroogal.com/calculate-financial-independence-number/
  2. https://www.ramseysolutions.com/retirement/what-is-financial-freedom
  3. https://thefinanciallyindependentmillennial.com/steps-to-financial-freedom/

Wealth and Financial Freedom Mindset

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A major factor regarding effectively managing your money and achieving financial freedom is maintaining a positive and confident mindset. Maintaining a positive growth mindset takes effort and knowledge. Here are some ways to start thinking about financial matters and building wealth:

Focus On What You Want – And Take It! So many people are too timid to admit they want something and go for it. When there is something that you want to accomplish don’t think “I could never actually do that”, think “I could do that and I WILL do that”. Play to win, not to avoid defeat.

This doesn’t mean to have to become a selfish jerk. What it means is becoming more assertive and honest with yourself. You don’t have to grab off other people. There is a big pot of unclaimed gold in the middle of the table — why shouldn’t you be the one to claim it? You deserve it!

Confront closely-held beliefs. Spend some time dissecting and understanding the previously-held beliefs you have about money. You learn a lot about money from your family at a young age—either that money is good or money is evil, for example.

Some people may grow up believing that money is a scarce resource, while others understand money as a tool. There are many numbers of qualities that get assigned to money that are not objectively true.

If you have major fear or shame regarding money, you may want to consider working through these emotions with a financial therapist. Your feelings are valid—but that doesn’t mean you have to live with them.

Integrate affirmations into your daily routine. You may find affirmations to be a grounding part of your day. For example, affirmations such as “I am worthy of wealth,” “I am capable of managing my money,” and “There is money out there to be made by me” could act as helpful reminders that you are in charge of your money and not the other way around.

To develop a positive mindset and to become a person who is “good with money”, it is essential to understand that achieving financial freedom and accumulating wealth is a journey. So, consider taking it step by step. Start by building familiarity with your financial situation, and look for small ways to improve it and make it better every day.

Don’t Spend Your Money – Invest It. The reason you need to save your money is to grow it by investing it for the long term. Millionaires tend to be frugal people, and that’s because they know the true value of money is in investing. Being your own boss goes hand-in-hand with building wealth. You’ll want to quit your regular job at some point.

Bottomline is to stop working for your money and invest, which puts your money to work for you.

Rather than buying yourself a new iPad, that $500 could be used to invest in the stock market. Find the right shares (more on that later), and that money could easily double within a year.

References:

  1. https://www.lifehack.org/articles/money/develop-millionaire-mindset-6-easy-steps.html
  2. https://www.sofi.com/learn/content/am-i-bad-with-money/